Warnings as the squeeze hits home
AS MORE THAN half of all Brits admitted today that they were tightening their belts, Tees retailers were advised to slash stock levels and take a hard look at overheads - including staff.
Research released by market analysts Mintel, which showed 57% of cash-strapped consumers were pulling in the purse strings, followed grim news for the high street yesterday, which saw like-for-like sales fall by 1.6% in March - the first monthly fall for nearly two years.
Ray Priestman, who is responsible for the three Tees Valley offices of national accountancy firm Vantis, said although Teesside has been insulated from the worst effects of the credit crunch, big ticket retailers in particular were hurting.
“But as always, if it snows in London it’s a major crisis and if it snows in Teesside it isn’t,” he said. “The credit crunch and retail crisis was biting far more in the south than in the north, but it’s now filtering up country.”
While retailers in the north had failed to benefit from the exaggerated spending ‘highs’ enjoyed by their southern rivals, neither had they been hit by the despairing lows. “It’s the nature of doing business in the north, which is good, because we want a stable economy,” he said.
“Although there is a credit crisis, I think canny northerners are not as exposed as they are in the south. House prices are not as high for one thing.”
But he warned retailers on Teesside against being lulled into a false sense of security and he was advising many to take stock.
“We’ve seen stealth taxes which, in reality, have impaired people’s spending power, but there’s been a feel-good factor and they have gone out and spent on credit anyway. Now people are looking at that debt and saying ‘We can’t take on any more’. What they cut back on is the luxury items. There’s definitely now been a down turn.”
British Retail Consortium figures yesterday were described as “horrifying”, and hopes mounted of a further interest rate cut before the summer. Today’s research showed 44% of consumers had been hit by the rising cost of everyday living with 17% saying they had been hit by unforeseen household bills - including higher fuel costs.
“There’s not a lot retailers can do at the moment and it’s a self-perpetuating cycle because fear is building,” said Mr Priestman.
“We advise retailers to cut back on overheads and carry less stock because that’s a dead loss until you can turn it over into cash and cash is king in retail.
“But when you start looking at overheads, one of the biggest is the workforce - it’s inevitably going to lead to unemployment, both locally and nationally.”
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